Question 11

The following facts pertain to a non-cancelable lease agreement between Carla Vista Leasing Company and Tamarisk Company, a lessee.

The collectibility of the lease payments by Carla Vista is probable.

Discuss the nature of this lease to Tamarisk.
Discuss the nature of this lease to Carla Vista.

Prepare a lease amortization schedule for Tamarisk for the 5-year lease term. (Round answers to 2 decimal places, e.g. 5,275.15.)

Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2020 and 2021. Tamarisk’s annual accounting period ends on December 31. Reversing entries are used by Tamarisk. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15. Record journal entries in the order presented in the problem.)

Question 11

The following facts pertain to a non-cancelable lease agreement between Carla Vista Leasing Company and Tamarisk Company, a lessee.

The collectibility of the lease payments by Carla Vista is probable.

1. Discuss the nature of this lease to Tamarisk

a) operating b) finance c) sales type

2. Discuss the nature of this lease to Carla Vista.

a) operating b) finance c) sales type

3. Prepare the journal entries on the lessee’s books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2020 and 2021. Tamarisk’s annual accounting period ends on December 31. Reversing entries are used by Tamarisk. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 5,275.15. Record journal entries in the order presented in the problem.)

The Kingbird Company issued $360,000 of 11% bonds on January 1, 2020. The bonds are due January 1, 2025, with interest payable each July 1 and January 1. The bonds were issued at 102.

Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Kingbird Company records straight-line amortization semiannually.

Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Sage Hill Company. The following information relates to this agreement.

a) Prepare an amortization schedule that would be suitable for the lessee for the lease term. (Round answers to 0 decimal places, e.g. 5,265.)

b) Prepare all of the journal entries for the lessee for 2020 and 2021 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,265. Record journal entries in the order presented in the problem.)

97. Salmone Company reported the following purchases and sales for its only product. Salmone uses a periodic inventory system. Determine the cost assigned to cost of goods sold using LIFO.

66. A company had the following purchases during its first year of operations:

On December 31, there were 31 units remaining in ending inventory. These 31 units consisted of 3 from January, 5 from February, 7 from May, 5 from September, and 11 from November. Using the specific identification method, what is the cost of the ending inventory?

72. A company had the following purchases during its first year of operations:

On December 31, there were 31 units remaining in ending inventory. These 31 units consisted of 3 from January, 5 from February, 7 from May, 5 from September, and 11 from November. Using the specific identification method, what is the cost of the ending inventory?

Barry Yellen, CPA, is a sole practitioner. The largest audit client in his office is Rooster Sportswear. Rooster is a privately owned company in Chicken Heights, Idaho, with a 12-person board of directors. Barry is in the process of auditing Rooster's financial statements for the year ended December 31, 2019. He just discovered a related-party transaction that has him worried. For one thing, the relationship has existed for the past two years, but Barry did not discover it. What's just as troubling is that the client hid it from him. Rooster bought out Hen Sportswear two years ago but still operates it as a separate entity, and since then has systematically failed to disclose to the private investors related-party transactions involving the CEO of Rooster, Frank Footer. It seems that Footer is borrowing money from Hen and is deeply in debt to the CEO of that company, who is his brother-in-law. Also, Hen has hired relatives of Footer, most of whom are unqualified for their jobs, and pays them an above-market salary. This has been hidden from Barry as well. Barry was informed by an anonymous tipster that Rooster operates a secret off-balance-sheet cash account to pay for cash bonuses to senior officers, travel and entertainment expenses, an apartment rental for Footer, and cash and noncash gifts to local government officials to "grease the wheels" when permits need to be expedited in favor of Rooster. Barry doesn't know what to make of it, because he is too focused right now on the related-party transactions with Hen Sportswear. Barry is in the process of questioning Hans Burger, CPA, who is the CFO of Rooster, about these transactions. Burger explains that he had raised these issues with Footer but was instructed in no uncertain terms to leave them alone. He did just that. Burger told Barry he needed this job and wouldn't jeopardize it out of a sense of "ethics." Barry is in his office back at the firm and reflecting on how best to handle this matter.

Questions

2. What are related-party transactions? Why are related-party transactions a particularly sensitive area? What do you think Barry should do with respect to audit obligations for these transactions?

Mr. C is a 22 year old, white, single, male who is in his third year at a local university in Albuquerque, New Mexico. He is majoring in Philosophy and American studies. When he is not in school he lives with his parents.

He has been taken to the mental health center for an evaluation today, brought by his parents who were concerned after he was demonstrating “strange” behaviors and then abruptly dropped out of school after he failed his summer class. This baffled the parents since he has always been an A and B student. Up until three months ago he seemed to be doing okay. He was living in the dorms and there were no reports he was doing poorly. When asked why he dropped out of school, he stated the administration of the school was watching and targeting him for being a suspected spy for another university.

He stated the professor of his philosophy class warned him of this in a coded message on one of his powerpoints. None of the other students noticed this, but the message was clear to him. He also verbalized he could hear the students laugh at him behind his back. Additionally, he began hearing two voices, which he did not recognize. These voices would comment on his behavior and criticize his actions. They were telling him to drop out of school because if he didn’t the administration was going to make a public spectacle of him.

He stated he smoked a little bit of pot when he was in high school, but didn’t like it because it made him feel weird. He also didn’t like the taste of alcohol. He grew up in an upper middle class environment. His mother is an attorney working in real estate law and his father is a professor in the English department of another university in New Mexico. They stated he has always been very intelligent and always a little shy, but not overly so. He spent a lot of time alone, but his parents didn’t consider him to be a “loner” since he occasionally had one or two friends. He didn’t like to go to parties or places where there were large gatherings. The parents did not see this as odd and were glad he was keeping away from trouble. He joined a couple of youth groups in his adolescence which were tied to his church, but dropped out after he felt they were pressuring him to change his beliefs.

When the social worker entered the room to begin the evaluation, Mr. C asked her if she worked for the administration and asked to see her credentials. He was disheveled in appearance, wearing a dirty wrinkled shirt--which was different from his past habits, according to the parents. He always prided himself on being clean and neat. He was slightly agitated and during the interview got up from his chair several times. His thinking, at times, was tangential with some loosening of associations. He denied any suicidal or homicidal ideation. His only previous psychiatric history was outpatient treatment he attended with his family in a family therapy session. This occurred when he was around 15 y.o. when his parents were thinking of getting a divorce. The parents did not divorce and have remained together. The father did state one of his brothers was hospitalized for psychiatric reasons in Colorado several years ago, and didn’t know the circumstances.

Based on the above vignette for Case #1, list the principal diagnosis/diagnoses (including any and all appropriate subtypes and specifiers)

Jaide and Jim plan to send their daughter Sarah (currently 7-year old) to university at the age of 18 for a 4-year undergraduate program in Ontario Tech. University. They intend to invest ANNUALLY in a GIC account, which pays 3.5% interest per year. That is, the first annual deposit occurs today (i.e. 7th birthday) until she turns 17. The university tuition currently is $8,000 per year. It is estimated that the tuitions grow at the inflation rate (2% per year). Tuitions will be paid at the beginning of each year (i.e. when Sarah is 18,19,20, and 21). Assume there is no tax to be paid on the account upon withdrawal. How much should the parents save each year to be able to fully fund their daughter’s university tuition expenses?

During a national emergency, a managerial accountant was called back to active duty with the US Army. An acquaintance of the accountant forged papers and assumed the identity of the accountant. He obtained a position in a small company as the only accountant. Eventually he took over from the manager the functions of approving bills for payment, preparing and signing checks, and almost all other financial duties. On one weekend, he traveled to some neighboring cities and mailed invoices made out to the company for which he worked. On Monday morning, he returned to work and began receiving, approving, and paying the invoices he had prepared. The following weekend he returned to the neighboring cities and cashed and deposited the checks in bank accounts under his own name. After continuing this practice for several months, he withdrew all of the funds and never was heard from again.

What steps could you have taken to prevent this theft? Remember that this small company had limited financial resources and limited personnel.

1. Discuss how the role of the management accountant team can deliver better results for the company. Following the discussion, complete a 10-point action plan for the management accounting team to address.
2. Identify and discuss risks that the company needs to consider for 2020 that should be discussed at the Board level. You are to incorporate in your report the impacts of the Coronavirus pandemic.